Spotlight

Indian equities are likely to remain choppy as investors weigh softer U.S. inflation data against elevated Treasury yields, volatile crude oil prices and continued uncertainty surrounding the Middle East. The external backdrop remains mixed, leaving domestic markets sensitive to developments in both global rates and energy markets.

Diplomatic efforts between the U.S. and Iran have gained some traction, with Tehran receiving Washington’s response to a proposed seven-day trust-building plan aimed at easing tensions and facilitating the reopening of the Strait of Hormuz. However, differences over the sequencing of the proposed measures remain unresolved, leaving the path toward a broader de-escalation uncertain.

Crude oil has moderated from recent highs, with WTI trading around $90 a barrel and Brent near $98. The decline offers some respite to energy-sensitive economies such as India, but oil remains elevated and highly responsive to developments around the Strait of Hormuz. Any setback in diplomatic efforts or renewed disruption to energy flows could quickly restore the geopolitical risk premium in crude prices.

The U.S. inflation backdrop was somewhat more supportive, with August headline PCE inflation rising 3.4% year on year, below the 3.7% market expectation, while core PCE stood at 3.0%. The softer reading has eased some immediate concerns over further Federal Reserve tightening, although Treasury yields remain elevated. The U.S. 10-year Treasury yield has climbed sharply in recent weeks, tightening global financial conditions and weighing on broader risk appetite.

Asian markets are also providing mixed signals, reinforcing the cautious external backdrop. Japan’s Nikkei is gaining around 1%, helped by strength in semiconductor stocks, while South Korean equities remain under pressure as elevated bond yields and broader risk concerns weigh on sentiment.

Technical View

Nifty 50

Nifty 50 continues to remain under pressure, extending its recent corrective phase and maintaining a weak near-term technical structure. However, the index is approaching a key support zone, where oversold conditions could trigger intermittent recovery attempts. On the upside, the 22,800–23,000 region is likely to remain a critical hurdle, with 22,800 acting as the immediate resistance. A sustained move above 22,800 could provide some stability and support a recovery towards the 23,000 mark. However, unless the index decisively reclaims this resistance level, recovery attempts are likely to remain vulnerable to renewed selling pressure.
 
On the downside, the 22,600–22,550 zone remains the immediate and crucial support area. A decisive break below 22,500 could intensify selling pressure and drag the index towards the 22,300 region, while the April low near 22,182 remains a deeper support level. Momentum indicators continue to reflect weakness, keeping the near-term technical outlook bearish. Sustaining above 22,550–22,600 could support a technical rebound, whereas a decisive breakdown below this zone would strengthen the downside momentum and increase the risk of further correction.

Bank Nifty

Bank Nifty demonstrated comparatively better resilience than the broader market in the previous session. However, the broader technical structure remains weak, with the index continuing to trade below several key moving averages, indicating limited strength in the recovery. On the upside, the 55,000–55,100 zone is likely to act as the immediate resistance area, followed by 55,300–55,500. A sustained breakout above 55,500 could improve the near-term technical structure and support a recovery towards higher levels.
 
On the downside, 54,500–54,400 remains the immediate support zone. A decisive break below 54,400 could intensify selling pressure and expose the index to the 54,000–53,800 region. While momentum indicators remain mixed, the overall technical setup continues to warrant caution. Sustained trading above 55,500 would be important for strengthening the recovery, whereas a break below 54,400 could reinforce downside pressure and increase the risk of further weakness.